First-time home buyer mistakes to avoid
With so much to think about, it’s unsurprising that some first-time homebuyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar fate.
Not budgeting for closing costs
In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain
closing expenses, such as homeowner's insurance, home inspections, and title searches. It is not uncommon to ask the seller to pay for your closing costs, but in a multiple offer scenario having the extra cash to pay part or all of your own closing, can
make the difference in securing the home! Calculate your expected closing
to help you set your budget.
Not saving enough for after move-in expenses
Once you've saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint, and any improvements you may
want to make after moving in.
Buying a home for today instead of tomorrow
It's easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering
will suit them.
Passing up the chance to negotiate
A lot can be up for negotiation in the home buying process, which can result in major savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing
to pay for any of the closing costs? If you’re in a buyer's market, you may find the seller will bargain with you to get the house off the market.
Not knowing the limits of a home inspection
After your offer is accepted, you’ll pay for a home inspection to examine the property’s condition inside and out, but the results will only tell you so much.
Not buying adequate homeowners insurance
- Not all inspections test for things like radon, mold or pests, so be sure you know what's included.
- Make sure the inspector can access every part of the home, such as the roof and any crawl spaces.
- Attend the inspection and pay close attention.
- Don’t be afraid to ask your inspector to take a look — or a closer look — at something. And ask questions. No inspector will answer the question, “Should I buy this house?” so you’ll have to make this decision after reviewing the reports and seeing
what the seller is willing to fix. Consult with your real estate professional to get the best advice on what can be negotiated.
Before you close on your new house, your lender will require you to buy homeowner's insurance. Shop around and compare insurance rates to find the best price. Look closely at what’s covered in the policies; going with a less expensive policy usually means
fewer protections and more out-of-pocket expenses if you file a claim. Also, flood damage isn’t covered by homeowner's insurance, so if your new home is in a flood-prone area, you may need to buy separate flood insurance. Often times the cheapest option
for insurance will be by bundling with your car insurance provider.